The Null Device

Renting your way to poverty

There's a piece in the Telegraph (yes, the Torygraph) about the London housing crisis; the prognosis is not good. Basically, it's going to get much worse. Private tenants are, of course, screwed as they've always been, and there'll be no relief as the Invisible Hand Of The Free Market tightens the screws on them (and this will increasingly apply further from London, encompassing the entire South-East of England; basically, anyone living anywhere where a commute to London is not utterly soul-crushingly miserable will be paying through the nose for the privilege). The lucky few who have managed to grab a tenuous grip on the bottom rungs of the housing ladder as it started to pull away are also not out of the woods; as interest rates start to rise, many will find it difficult to keep up and some will fall off. As for their houses, and the thousands of flats being built around London, they're unlikely to help: virtually all of them (other than the super-premium ones bought as investments and “bubble-wrapped” by foreign investors) will be snapped up by buy-to-let landlords, flush with cash from their healthily growing rents and looking to build up their portfolios further, aided by preferential mortgage terms. The end result looks pretty bleak for everyone. Well, everyone with the exception of landlords, for whom life is good and can only get better:
The Joseph Rowntree Foundation extrapolates and suggests that by 2040 private rents will rise by more than twice as much as incomes, resulting in a majority of future private renters in England living in poverty. Social renting, currently the tenure of one in seven people, will house only 10 per cent of the population by 2040.
And don't expect relief from any of the major political parties; none of them have submitted any proposals for fixing things, save for ones which would further push housing prices up, and keep the cash flowing into the pockets of landlords. Perhaps the fact that a third of MPs are buy-to-let landlords has something to do with their collective reluctance to in any way interrupt the party?

The elephant in the room is the assumption that the normal state of affairs is owning one's own home; this is a peculiarly Anglo-Saxon ideal, perhaps imported from the broad suburbias of the United States, where the average working stiff could buy and pay off a detached bungalow (at least in theory). Whereas in a lot of other countries, renting is seen as the normal state of affairs, in the UK, people live with the belief—or delusion—that it's a temporary state of affairs, a stepping stone on the way to being a fully-fledged adult member of the property-owning democracy. John Steinbeck famously said that socialism never took off in the United States because poor Americans, in their eternal optimism, saw themselves not as exploited proletarians but as temporarily embarrassed millionaires; perhaps in Britain, the idea of rent control, regulation (even such supposedly uncontroversial regulations as preventing landlords from evicting tenants in revenge for raising a fuss about problems), or even not rigging the system to funnel billions of pounds of taxpayers' cash to landlords, stems from a similar sentiment: that the hard-pressed renter, paying 60% of their income for a mouldy bedsit, will somehow eventually become a property owner, and, ultimately, graduate to the hallowed echelon of landlords, funding their golden years from the property portfolio that they will, in the fullness of time, inevitably own?

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